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Market round-up: State bonds don’t reflect finances of states

LiveMint logoLiveMint 04-10-2017 Livemint

The yield on state development loans does not reflect the respective states’ fiscal deficit and debt position, according to the Reserve Bank of India. In its monetary report that was released along with the policy, the central bank said that the interstate spread was, on average, within nine basis points during the first half of 2017-18 as against seven basis points in 2016-17 and 2015-16. The weighted average cut-off yield on state bonds have been in the 74-87 basis points range in September, marginally higher than the 77-81 basis points during April. A basis point is 0.01%. The share of market borrowings, which can be raised at relatively lower costs, particularly when markets do not differentiate between states on the basis of their respective fiscal deficits and debt, has increased, including for discharging past National Small Savings Fund liabilities.

Graphics: Naveen Kumar Saini/Mint

China bank stocks are new best hope for investors

A surge in Chinese bank stocks is taking the pressure off technology giants to keep this year’s rally going. The MSCI China Financials Index jumped 4.9% on Tuesday, the most in more than two years, after the People’s Bank of China said it would reduce the amount of cash that banks must hold as reserves from next year. The gains came after the gauge of financial shares traded at its lowest level in a decade relative to the MSCI China Index. With just two stocks—Tencent Holdings Ltd and Alibaba Group Holding Ltd—accounting for almost half the 46% advance by the MSCI gauge this year, the index is increasingly vulnerable to any reversal in tech companies. Such a risk was highlighted just last week when a global technology sell-off helped drag the MSCI China Index down as much as 3% in just one day. Bloomberg

Wind turbine prices plummet in the US

The price for US wind turbines delivered in the second half of 2017 dropped to $0.83 million per megawatt (MW), according to Bloomberg New Energy Finance’s Wind Turbine Pricing Index—well below the global average price of $0.99 million per MW. Fierce price competition between turbine manufacturers to secure as much of a surge in 2016 orders drove the rapid US pricing plunge, Bloomberg New Energy Finance said in a blog. “The 11 gigawatt surge in 2016 turbine and equipment orders—delivered at most 3.5 months after 2016—was a direct result of developers rushing to qualify as many projects possible for the final round of 100% of US wind’s main federal subsidy,” adds the blog post. One gigawatt equals 1,000MW.

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